Australia Market extends losses

Headline indices of the Australian financial market extended losses on Wednesday, 19 December 2018, as risk aversion selloff continued on caution ahead of the U.S. Federal Reserve's upcoming interest rate meeting decision due on Wednesday and Bank of Japan's monetary policy decision due on Thursday. Most of ASX sectors declined, with the overnight plunge in crude oil prices dragged energy stocks lower, however, banks and gold miners were among the notable gainers. In late afternoon trade, the benchmark S&P/ASX200 index dropped 8.87 points, or 0.16%, to 5,580.60 points, while the broader All Ordinaries index shed 11.87 points, or 0.21%, to 5,649.97 points.

Investors are cautious ahead of the Federal Reserve's interest rate decision Thursday morning. The rate decision will be followed by a press conference with chairman Jerome Powell. The market is pricing in a 70% chance of a US rate hike however economists will pay most attention to the tone of Fed Chair Jerome Powell's statement. Many investors now expect signs of economic turbulence would prompt the Fed to signal a slowdown in the pace of tightening next year.

 

The Bank of Japan's monetary policy decision is due on Thursday, followed by a briefing from Governor Haruhiko Kuroda. A Bank of England decision is also scheduled on Thursday.

Crude oil prices bounced back slightly in Asian trade on Wednesday after plunging on worries about rising supplies and weakening global growth, which could weigh on demand. Benchmark U.S. crude gained 12 cents to $46.72 a barrel in electronic trading on the New York Mercantile Exchange. The contract gave up $3.60 to $46.60 on Tuesday. Brent crude, used to price international oils, added 34 cents to $56.60 a barrel. It lost $3.35 to $56.26 a barrel in London.

Shares of energy sector tumbled the most among ASX sectoral peers, after crude oil prices plunged more than 7% overnight. Among energy stocks, Origin, Woodside, Oil Search, and Santos were down between 1% and 4%.

Shares of materials and resources were softer. BHP Group was down 0.2% and Fortescue Metals fell 0.3%, while Rio Tinto was up 0.1%.

Shares of financials were edge higher. ANZ Banking, National Australia Bank, Westpac and Commonwealth Bank were higher in a range of 1% to 1.5%.

CURRENCY: Australian Dollar, seen as a proxy for China-related trades, edged down against greenback on Wednesday. The Australian dollar was quoted at $0.7187, down from $0.7190 on Tuesday.

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